Friday, February 26, 2016

Card Not Present Credit Card Fees

I would like to thank the Card Fellow people who have a great guide to credit card processing. Worth reading....

One of the ways that credit card processing figure costs is with the interchange rates.  The interchange fees f  change twice a year in April and October. Here are the current interchange fee schedules:
Historically, interchange has been imposed upon merchants to reimburse issuing banks for lost interest resulting from a cardholder's grace period for repaying their debt. This is why Visa still refers to interchange fees as "interchange reimbursement fees." Today, Visa states that "the primary role of interchange is to create an equitable balance of incentives between a cardholder's financial institution — which issues Visa cards to consumers — and a retailer's financial institution that enrolls retailers and processes Visa transactions for them." (Source)
When a credit card transaction takes place the issuing bank (cardholder's bank) pays the acquiring bank (merchant bank) for their cardholder's purchase less the interchange fee for the transaction. The acquiring bank then pays their merchant from the remaining balance minus a markup for processing the transaction.

9 comments:

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